Smart Answers

Support Women Running Growth Businesses

Women represent only 35 percent of startup owners in the U.S., even though 50 percent of college students and 46 percent of the U.S. workforce is female. Women’s startup businesses also “tend to experience less growth and prosperity than do firms started by men,” according to a paper released this week by the Ewing Marion Kauffman Foundation. “Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers” notes that increasing numbers of highly qualified women work in science and technology, industries that frequently birth high-growth startups, says the paper’s author, Lesa Mitchell. But while they have broken through multiple glass ceilings, many women still find that glass “walls” keep them from venturing outside of academia or corporate positions into entrepreneurship. Mitchell spoke about the paper this week with Smart Answers columnist Karen E. Klein; edited excerpts of their conversation follow.

Karen E. Klein: This paper pulls together existing research on women and startups that has not been presented as a whole before. Why write the paper now?

Lesa Mitchell: My rationale is that frankly I want to put the hammer on the table and keep slapping it. I have a sense of urgency because we need new firms in the country and we need to grow existing firms that could immediately add jobs.

There are a lot of competent, existing women business owners out there. If we could actually engage and support them, and they could progress into the fast-growth companies that add lots of new jobs, we could see economic recovery happening much sooner. As I say in the paper, we are not utilizing the economic resource of women who are capable of starting growth companies, and we can’t afford not to support them.

How are they not being supported now?

This is one of my serious frustrations: We’re a funder of [groups] like Astia, Women 2.0, and Activate that exist to educate and support women business owners and leaders. But these groups have a hard time raising money. Astia is well known in New York and San Francisco, for instance, but it’s not known at all in the Midwest.

When I go to big corporations, it’s a 20-minute conversation about supporting entrepreneurs, and everyone’s easily in for that. Companies and philanthropies want to support startups. But when we end up talking to big companies about supporting women’s entrepreneurship, we frequently get pitched over to the marketing department.

Why?

They see women’s entrepreneurship as a gender issue, so sponsorship is tied to a marketing play vs. corporate philanthropy. It’s more like, we would do this because it’s a nice thing to do, and we can market it to our female customers, not because it’s something they need to do to encourage economic growth.

Is that attitude justified at all, given that your paper documents how few women start high-growth companies?

I don’t think so. It’s a chicken-and-egg thing. These nonprofit programs I mentioned are starting to see huge numbers of applicants, but because of the limited resources they have, they are having to turn a significant number of them down.

We sponsored a women-in-med-tech conference a few weeks ago in San Francisco that as far as I know was the only conference of its kind in the past five years. It brought together women entrepreneurs and big company people. What we found amazing is that it sold out immediately right after we opened it up because we only had so much capacity.

One point your paper makes is that more women get higher education degrees in life sciences than men do, yet only 6.5 percent of female life science faculty members serve on advisory boards of high-tech businesses, compared with 93.5 percent of comparable male faculty members. That’s such a big gap—why do you think it is?

It’s all about connections. Women produce research that is the same quality, or maybe even a little better, than men’s. But they don’t get patents at the same rate as men or have the networks that would direct them in how to commercialize their research.

The paper points out that women have broken through previous barriers into positions such as university president and corporate chief executive, but the same progress hasn’t been seen for women entrepreneurs. We do have a significant number of women in the high-growth feeder group—women who graduated from Harvard, have masters’ degrees and PhDs, and have the ability to create high-growth companies. But the percentage of those doing so is not great.

The conclusion you reach is that ultimately a different skill set is needed for entrepreneurship than for advancing within academia or corporate structures.

All entrepreneurs need the same thing: networks and education. The programs that we support, such as Astia and the others, are all about building out networks for women because women don’t do that for themselves. We talk to women business owners and ask how many have boards of directors, and the answer is often zero. We ask how many have advisory boards, and the answer is about 50 percent. And these aren’t startups, they’re companies with $1 million to $20 million in revenue.

Frankly, nobody has ever pushed them to do it. They’ve been pretty successful going along the way they’re going, but if you want to scale your business, you need to surround yourself with advisers who have access to the customers or the capital you need.

What solutions does your paper suggest?

I’d love to have an “adopt-a-woman-entrepreneur” day. I’d love to see high-tech and bio-tech companies invite women scientists to be on their boards. And successful women entrepreneurs and inventors need to be more visible as role models to women considering entrepreneurship.

Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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